PakStox Outlook

The Federal Reserve slashed the target range for the federal funds rate by a substantial 50 basis points to 4.75%-5%. Officials anticipate a total of 100 basis points in rate cuts by the end of the year, implying two more 25 basis point reductions. For 2025, an additional percentage point in cuts is projected, with a final 50 basis point cut expected in 2026. The Fed statement said..."Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the Committee's 2 percent objective but remains somewhat elevated." https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm

In line with expectations, the Federal Reserve raised interest rates by a 25bps. This is the ninth increase in a year. The Fed is trying to achieve a balance in its declared war on inflation while trying to tackle the emerging banking crisis. 

In his  Semiannual Monetary Policy Report to the Congress,  Federal Reserve Chair Jerome Powell  warned that the central bank is ready to increase the pace of interest rate hikes if incoming data exceed expectations . And that,  "...the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated."  He said that,  "d espite the slowdown in growth, the labor market remains extremely tight, and  inflation well above our longer-run goal of 2 percent". "The unemployment rate was 3.4 percent in January, its lowest level since 1969.  Although inflation has been moderating in recent months, the process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy." "If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," Powell said in his...

In his Semiannual Monetary Policy Report to the Congress, Federal Reserve Chair Jerome Powell warned that the central bank is ready to increase the pace of interest rate hikes if incoming data exceed expectations. And that, "...the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated." He said that, "despite the slowdown in growth, the labor market remains extremely tight, and inflation well above our longer-run goal of 2 percent". "The unemployment rate was 3.4 percent in January, its lowest level since 1969. Although inflation has been moderating in recent months, the process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy." "If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," Powell said in his testimony...